‘Tis the season.
Most folks think about their charitable giving at the end of the year. Thanksgiving and Christmas holiday seasons give us a bit of a nudge in the direction of gratitude and thankfulness. Naturally we tend to tie in to the emotion of the holidays. Music, smells of certain foods, decorations in our homes, office, stores and shops, even the street scenes promote festive joy. All these interactions are wonderful to help us reflect on helping others. Although excellent, I’m hoping we will all try to carry our giving forward into the new year – and all year long.
Most organizations with the mission of helping others are helping others throughout the year. HOTEL, INC doesn’t simply have a holiday presence. Their daily work is just that: Daily. Community Foundation of Southcentral Kentucky, Hospice of Southern Kentucky, Child Advocacy Center, Rotary Foundation, CASA, Boys & Girls Club, The Foundry, Habitat for Humanity, The HIVE, Kids on the Block, WROTE Foundation, Hope House, Red Cross, Junior Achievement, College Heights Foundation, Commonwealth Health Foundation, The Salvation Army, United Way, and literally every house of worship, church, temple, mosque and synagogue in our community help people year-round. The need is huge. The tasks are daunting. Yet, we can – and do – make a difference in our giving. Many people give of their talents. Many people give of their time. Some do both. (My apologies if your favorite charitable organization isn’t listed here. Omission of any organization is absolutely unintentional.)
The message here is to consider gifting on an ongoing basis. Every charitable entity I am familiar with accepts ongoing, regular gifts. Most will be happy to set up monthly automatic contributions. There are several advantages to regular automatic gifting. The first is that we won’t forget to make the gift. This may seem silly, but it’s quite serious. Behavioral finance experts find that when we give in a systematized, automatic way, we tend to continue that giving through good economic periods and also low economic periods. The giving becomes a habit. It’s a pretty simple concept. Another finding from the experts is that when we give in an automatic way, we tend to stay more closely connected with the organization, many times leading to more direct, hands-on giving of time. Wow. We actually feel closer to the organization and their cause and mission. Not only do we have financial interest, we “buy-in” to the cause and put our hands in service. Another big advantage to regular, automatic financial giving is how much it helps the organization to plan out its cash flow. Ongoing, automatic giving helps the organization better plan for its mission on an ongoing basis. Most charitable organizations have very limited resources – which leads to very difficult budget-making decision, which means fewer people receive help.
According to the IRS website, the Internal Revenue Code is 6,871 pages long. When you add in the federal tax regulations and official tax guidance, the number of pages swells to approximately 75,000. One thing is for sure in all that morass of paper: We need to use every part of the code possible to avoid paying unnecessary income tax. There are some very specific and particular ways to use the U.S. tax code to our advantage when giving charitably. Some of these tax-advantaged giving strategies have time limitation. One strategy in particular that is gaining popularity – yet still not widely used – is call Qualified Charitable Distribution (QCD). Simply stated, the QCD allows those that qualify to have a direct payment from the giver’s IRA made to a charitable organization without the QCD amount increasing the giver’s taxable income by that amount (subject to a maximum of $100,000 per year). The QCD strategy is only available to people 70.5 years of age and owning an IRA. The rules pertaining to QCDs are very specific and must be carefully followed I order to gain the tax advantage. There are other tax-advantaged methods and strategies for charitable giving, too numerous to list in this article. Please know that I am not a CPA and am not offering tax advice. Please consult with a CPA for your own specific situation and circumstance. If you do not have a relationship with a CPA, please call me and I will be happy to connect you with a CPA that will be the right fit for your own situation.
Clearly, charitable organizations need our help, both financially and also with our hands placed into service for the mission. This year, please consider helping and giving the entire year through. This regular giving of our time and talents will greatly benefit the cause – and will also benefit us as givers – through the joy that always come back to us. Now that is truly priceless.
If my team can help you in any way, please call on us. Happy New Year!
-by Ben Smith
Registered Principal, RJFS
313 East 10th Ave. • Bowling Green, KY 42101 • Phone: 270-846-2656
Raymond James is not affiliated with any of the organizations listed above.
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